tv On the Move Bloomberg August 11, 2015 3:00am-4:01am EDT
by 30tures of -- off points. is china.eme caroline hyde. caroline: phenomenal moves area that record move in the yuan. a devaluation to the tune of 1.9%, the most in 2 decades. it moves across asset classes and everybody knowing china is trying to boost exports. is it trying to tap into the imf? to ensure it will come to reserve currency? the special digital area for china. it is having an effect on the market. cac 40 is often by zero .3%. it is going to play in stocks in europe. he trading partner. look in luxury and cars.
how much does it show china's concern about the economy? how much will a hurt companies selling the to china? the yuan not getting u.s. much bang getting eu as much for your buck. out of greece, a deal is done. greek minister. we want at devil and the detail. it moved a bit. the euro is declining. the dollar rise. up against 16 major trading peers. it is dominating because of the yuan move. china trying to devalue and trying to play catch up as we will speak at the stephen saywell. the dollar has rallied higher against asian peers a global peers, will not see -- will not seen it. the overall affect market to
very stable. they let go because the data makes too much sense to start a export growth. dollar rallying higher. will it play in for the federal reserve thinking of a rate rise? is this exporting deflation to the rest of the world from china? will it mean they are less likely to do rate hike? dollar goes higher. 1.9% higher. willolleagues in asia point you through that. other asset classes for you gold, the dollar rally higher and gold goes lower. the dollar get stronger, gold less of a cooling to it in terms of a place to put your money and a safe haven. the stocks in europe on the back of the chinese move. the of w daimler, look at the moves. almost 2% lower. -- bmw, daimler, look at the moves.
stocks. affect your no big luxury to selling to china. luxury into china, lvmh, burberry. the sellout. concern about the chinese economy and awakening and the yuan. couple of deals. partnership merging. a bigger player. jrp, look for the stuff to go higher. this about a deal, a merger with a u.s. company, $10 billion supplier crane zimmerman -- cranes and materials. jonathan: you see in the mining rocks. anybody invested, a rebound yesterday. a rebound for the miners later. 8:00, three minutes into the session. a complete reversal. you are seeing that spillover effect right here in europe. the early part of the session. zeb eckertto say
have a very busy day. he is here to give us your asian market. zeb: absolutely right. to thesharp and a rough people's bank of china. the currency. the chinese sharpe drop, the biggest move in 2 decades. as they adjust to fixing rates. of the paddedears if devaluation to boost export competitiveness. no denying the numbers on the july disappoint in the broadest measure trade missing economists'estimates. the impact a regional currency. commodity countries. supply china. australia, more than 1% drop in the aussie dollar. new zealand dollar, the kiwi, down 1%. significant moves. not just these countries. south korean won on the order of 1%. check it out.
the most dollar moving since 2011. the biggest drop. very interesting from the geopolitical to see how asian trading partners and indeed global partners response. for china, its may put pressure on china's trading partners. it is goodof why news for equities. it will boost the situation for exporters. it we have seen the hang seng. generally higher. chinese shares in hong kong, the h shares. rallying to a two-week high. composite swinging between gains a lot. it is flat. give you a market snapshot. despite the drop in commodities. trading company, one of exports
clothing. watching it closely. cathay pacific is down in airasia is down. the impact. chinese companies are not all went to benefit. if you look at global story, a big move is caroline pointed out and impacting around the world and the currency markets. you are seeing this fixed income. send it back to you. jonathan: zeb eckert. only one story in town -- china. by thevalue the yuan most in two decades. the move as the nation works to liberalize the currency and after exports plunged by more than 8%. is this primarily a move to lose and the nation's grip on the currency or to support exports? and beijing.
what is going on? the case is about market discipline and the other, just about countering week export numbers? which is it? nik: that is the question of the day. when you look at the pboc's statement shortly after the yuan fixing was announced, rhwy kraus should and language of market reform. and 2013 toreforms give the market a greater hand of what they are saying is the yuan has been guided for quite some time. was out of whack with expectations, that is all well and good. as at the same time, it has very clear benefits for china's areomy at a time when there lingering doubts or growing doubts about whether it was hit 7% growth target at the end of the year pretty it seems to be
something that will play to both constituencies. those who say it will boost growth. it is intentional. all the other hand, no, wait a minute, it gives chinese market a greater handprint was to see how it plays out. sidehan: about the traits and looking at exports, how much does a move the dial for exports in the month to come? nick wadhams: there would need to be some more devaluation for exports to get a really big pot. it is very interesting if you look at the export numbers announced of the weekend, about 8% decline. the declines you saw were the biggest in areas that will be most affected by this currency move. exports to the eu were down 2%. exports to japan down 10%. depreciationncy or will really strengthen china's
hand as it goes to the market. that gives added sort of evidence to the idea this was a very intentional move by the government to spur activity. and getting back to the 7% figure, china really tried to bolster the case to hit and that by the end of the year. just the bank nick wadhams, thank you for breaking -- jonathan: nick wadhams, thank you for breaking it down. we are joined by our next guest. nick attion i put for the you create wake up on tuesday, a couple of days after dreadful export numbers. is it about alleviating the pain for export numbers are market discipline? guest: the last couple of years, effectively china's currency extremely overvalued. of 1520% thee aces
way it should be. the whole indicator of massive evaluation pretty huge capacity. all of the at a time when the trade isde, global slowing pretty slow down in asia-pacific is continuing. very integrated to what is happening in asia. effectively, the export, everybody else on a weaker trend. jonathan: one of the victims service was capital flows for chinese authorities. you weaken the currency, do have to do something to the triple rrr rate to alleviate capital outflows? ashok shah sergey brin: -- ashok shah: if you look at where it was a couple years ago, and cuts on the requirement. high.
highest in the world. the pressure of the monetary side is bearing down on the commodity growth rate. a time when the trains corporate side is extremely member. flows in to create order to service the debt. the only way is to export at the lower and lower prices. jonathan: if it is the trend to weakened currency and we have more to come, what does it mean for disinflation? another big problem for banks around the world? ashok shah: absolutely. still increasing if you look for example the mining sector. new capacity coming in. it means we could see another down in the commodity and energy and that goes back into the prices for manufactured goods. muche looking at a pretty
deflation from asia as we are getting from the commodity producing companies. -- countries. the inflation remain extremely subdued despite what with sing geopoliticaly and world. andthan: "purchasing power" never mind exporting. going forward, the import story could be clouded by a weaker currency. i look at the ftse 100, burberry , the commodity numbers. sitting here in london, if i see this is a trend in the months to to get more than it has been? : if you-- ashok shah look at china's rate, earning an extremely low numbers. it had been the financial side of the equation. now with what we've seen the
equity market then the extra boost on the gdp from financial services is going to abate. we will be talking about 5% growth trajectory. not only the consumer sector but across the board. jonathan: talked about losers and miners and the auto to call carson's decline. let's talk about winners. are the winners domestic china? ashok shah: you need to look outside of china for the real winners. the consumers in the market. cheaper goods available. also people market themselves, the big importers. the population, domestic economy. the once who will benefit from growth. a lot of beneficiaries and the larger market. i think that is where one should be looking at now. jonathan: ashok shah will stay
with us for you bail out deal reach pre-eu official said creditors and greece have agreed on terms. we are in athens lie. google by a different name. -- we are in athens live. corporatethe landscape. russia feels the pain. geopolitical pain. by 2009.gdp shrinking all about chinese purchasing power. yuan.evalue the we are back in two. good morning. ♪
jonathan: good morning and welcome back to bloomberg tv. the top stories. google is reorganizing with a new holding company called alphabet. it will give maynard webb operations more independence. web operations more independent. identifiedstates has inside traders that relied on hacked information. stolemputer hackers corporate press releases and traded on the nonpublic information. nine participants and they are expected to be charged later today in court in the u.s. china has unexpectedly devalued in the yuan by the most in two decades. people banks of china cut it by
a record 1.9 percent. it triggered the biggest one-day loss since 1994. news overnight, playing out quite clearly and the trading session. let's check out the equity markets. ftse 100 in the red. -- 40 is down by 0.6 per 0.6%. see where it you is playing copper the mining sector. bhp, rio, glencore getting whacked. all down. this is about purchasing power. yes, it might help your exports to what does it mean about imports? spilling over into commodities for the aluminum getting whacked. knee-jerk reaction. what happened in china. investors we had a rebound of the commodity markets a late in the session. it is the opposite, the flip
side 90 -- 19 minutes into the trading day. not just how the chinese situation is playing gow but greece. the government and creditors agreed on terms of the third bailout. the parliament must require -- must pass the measures that is required. bloomberg news reporter joins us now for little bit more. the news, the headlines, what is the latest? reported bank indeed, -- reporter: indeed, the third bailout. onhave details remaining this agreement as the greek find mr. -- finance minister and terms and the greek government will give the bill to the greek parliament as early as today. lawmakers will coving tomorrow and then maybe thursday. lawmakers will vote for the deal.
given the meeting on friday to weekss the issue and next given enough time to the rest of the european parliament to vote for the deal. the first installment of 86 billion euros package to greece will be dispersed by august 20 when the government needs to meet a payment of 3.2 billion euros. ecb long redemption. jonathan: talk about details, ask me a question if you hours ago, reported that details still need to be ironed out. do they still need to be ironed out? it seems asamanis: they are. we walked only be speculating about the small details the finance minister talked about. we have information on the bigger hot topics, the energy front seems to be agreement with greece and creditors. 35 prior know there is
that greece needs to undertake immediately. and the larger pension refund and further tax increases that need to be seen i october. we have agreement. .25% that is for this year. agreed of the surplus for the next year. 1.75% form sorry, 2017. you should take a step back. fromu think you're safe the greek headlines, it is greek media reporting on the greek elections as early as next month. greece will remain a hot topic. jonathan: vassilis karamanis with a reality check. negotiations -- and develop a national hurdles
within your and most notably with an germany. elliott gotkine has more. we heard from one of mr. schaeuble's deputies and what do they have to say? elliott: they said they do not want to do be a one-off to gay greece to the next hurdle which is a repayment on august 20. they want to the bill long-term greece, something that feels it out once and for all. the wishful thinking or optimism or hopes, it does not have with the previous 2 fellows. this will cut a leash -- unleash octaves is billion euros. we will have to wait and see. -- 86 billion euros. sureermans want to make they will have all of these late-night negotiations floor out to say that the deal and find themselves back here in three months, six months. they want to get it done have
long-term agreement with the guess agrees back on track and the eurozone. jonathan: thank you. final thoughts from ashok shah. asked elliott said, what shapes of the deal of the process and talks over the last few months with the ecb deadline and august 20 deadline? ok, is it what keeping the agreement together? , does it fallaid apart after that? ashok shah: it will remain a crisis for a few years. the most important thing to bear in mind is what the imf has been saying. termsd some mechanism in of the debt. from the point of view, very keen to measure. so coherentthere's and scrutiny in terms of what we agree. every time something is agreed,
it falls apart a few months later. no reason to expect anything different for jonathan: we know is a on terms and talk their details to be ironed out. details tend to matter with greece is concerned. one of the major details as the imf. where are we with that story? can gr get the money without imfeece -- greece without the imf? to thatah: we will come question again and again. imf really coming to the party. one of the things that needs to create a long-term, viable solution is debt reorganization. weibo for any agreement is reached. minds aroundt our
the fact it will blow up once in a while. another to keep it going. not going to be done exhaustively. jonathan: you have had to deal with when clients call you up, should i care? your role, and -- euro-dollar hosting off, should i care? ashok shah: i do not think so. in terms of taking care of the situation, your banking sector is pretty much producing exports. no collateral damage. if you look at export, import side, minimal amount involved. most of the debt is held by the ecb and imf. and means strong enough to take any right. economically, the situation is pretty isolated. more of a political situation in terms of if we will allow a country to leave the eu?
is an issue, the saints that the arguments rates. jonathan: the argument is not moved on. what is in a name? google reorganizes as alphabet and a surprise move. we were bring you the details after the break. 26 message of the trading session. so much to catch up on. the board. read.t ftse 100 down by 0.6%. a read across in china. devalue the currency printed what does it mean for purchasing power imports? the commodity markets desk playing out in the commodity markets. mining stocks of getting hit. is down by 2.4%. rio off by two percentage points. will a breakdown the market moves after the short break. ♪
jon: good morning and welcome back to bloomberg tv. time to catch up to speed with some of the top stories. greece and its creditors have agreed on terms for the third bailout in the parliament must now pass the terms before a meeting of euro zone finance ministers scheduled for friday. singapore reduced its growth forecast after gdp fell 4% in the third quarter. the singapore dollar felt was lowest level in five years. and china, this is the big story they have unexpectedly devalue the u.n. by the most in two decades. the cut the daily paik by record
1.9%. 31 minutes into the session and you can see how this is playing out and european equity markets. the ftse 100 down by 6/10 of 1%. the dax also up by 0.6%. the biggest loser today -- the stock 600 in the the red for 2016. about purchasing power and what it means for commodity markets and the minors and what it means for the commodity currencies. the aussie dollar is down by 1% against u.s. equivalent. a for brent crude are also lower. spilling into the commodity producers and the commodity producing currencies as well. so there are the market moves with a lot of talk about. another story dominating the
headlines this morning is google reorganizing the company under a new holding up he called alphabet. web operationsin for independence and gives investors more visibility into spending plans. let's bring in elliott gotkine. alphabet doesn't quite have the same ring as google. they wereder whether sitting around and having soup or watching sesame street or something to come up with that name but they seem to justify it in slightly more lofty terms. larry page in his missive on the blog post yesterday said we like the name alphabet because it means a collection of letters that represents language one of humanity esther most important innovations and is the core index of the google search and we like that alphabet being an investor return above benchmark and it seems to happen yesterday with shares rising some 6%. we go that google has
effectively become a conglomerate with all of these disparate businesses and tentacles extending into everything. along with google map -- google maps they have life-sciences send the group working with diabetes and calico trying to find ways to make you live longer and google x such as driverless cars. these businesses are already part of google and it will now be a part of alphabet and larry brady -- larry page and the other cofounder will now be the ceo and president of alphabet. jon: i'm looking at right now up 6%. over the earnings call, ruth looking at the idea that they may look at cost management. this is about visibility knowing what the company is actually up to. has been keen and she said to investors i want you to get a better handle on this business because they are not
giving away any trade secrets. this i think as part of getting a better visibility on how the businesses do. macnow that the web search in contributes the lions share of the $60 billion or so revenues but investors don't really know how much google is spending on things like driverless cars or how much revenue it is getting from things like the life sciences division or why fight balloons. we do not know how much detail we will get until january when alphabet will report its first set of results because these changes will happen incrementally to think it will give apple better currency with which to pursue acquisition and allow them to spin off more easily and given the cutthroat world of tell -- talent perhaps if you've got google x going to hire people they might get more options in a particular division of google x and that might make
them feel they're working for a young and thrusting startup that has better growth prospects than the overall alphabet soup of companies contained within alphabet. jon: i'm still digesting that. yesterday twitter stock rose after interim ceo jack dorsey tweeted about his purchase of 870 $5,000 of shares saying he is investing in twitter's future. caroline hyde joins us for more. dorsey has not made as much fuss over his past transactions so why now? caroline: because he is buying them. previously he was selling. yesterday he started tweeting that he had just bought some. a cool it hundred $75,000 worth. it's interesting not just his
purchases but other executives within twitter. peter fenton has been buying up stock, $200,000 worth in the director peter curry also purchased a cool million dollars of twitter. inause of investing twitter's future as jack dorsey put it, but also there was some other positive news. national football league. nfl as it is known in the u.s.. a multiyear agreement signed with twitter. you'll get new videos and highlights for year-round deals expanding on the existing relationship they already had but they said that brands cannot get enough of this. also viewers, people who use twitter love the highlights on twitter so this is a new deal. shares have jumped 9% and you can see them currently on my bigen but overall this is a
move for twitter stock and something investors are interested in. whati have to digest twitter is doing and google. and then alibaba, what is the story? caroline: new school goes old-school. this is an internet company buying up brick-and-mortar. it is all about logistics and delivery. alibaba is doing the same. they want to get brick-and-mortar on the ground to make delivery that much faster. spentave a record amount on alibaba, $4.6 billion on a company called suning. they have 1600 outlets. 290 cities. suddenly, we and online sales get that much easier. that is the target they're
announcing at the moment and it also helps them take on their competitor j.d..com. this is the online electronics seller that has been ramping up market share and doing well in terms of u.s. trading. yesterdaya beating when they saw the ramifications of this tie up. competitorly another has actually leapt on the tie up speculation that might be seeing internet companies wanting to get in on brick-and-mortar retailers. wanting to snap them up and make ownership. so far this is alibaba's biggest deal. jon: thank you for the tech crap. let's get some final thoughts on tech. tech, the media is guilty of this. they seem to focus on the fanatic plays, the blue sky thinking.
i want management that manages money properly and that is what we have seen over the last couple of months. jeff bezos delivering a profit to show that he can do just that. are you looking at the fanatic plays are just management? >> i think it is both but principally you need proper management. as you said so much is happening that without good management you won't be able to take it vantage of that. do ise have seen google not clear up the management structure and make it much more flexible so it allows each of the units to exploit the opportunities. as the organization becomes complex the management needs to change to take account of the opportunities in front of it but it will always remain very important because ultimately it
is the ability to generate cash flow down the line. it doesn't matter how it effectively got hauled off. i think they are seeing both sides of the equation work extremely well right now. jon: the big question is if you were not invested have you missed the trade? is therele is up 25% more juice to squeeze on google specifically? >> i think we need to wait for google to come down. it is been a very good year for them have all done extremely well. however, with the economy doing very well where covering more and in sumer spending is increasing and the wages are rising. think it's better to have significant exposure to the tech sector but in the short-term
and welcome back to bloomberg tv. by 0.6%.s down the ftse up by 0.6% and there is a china story running right to this equity market and mark barton has that story for you. currency falling by the most in 20 years. the world's biggest mining company but with the weaker yuan, stronger currency installers makes the dollar denominated commodities more expensive. bht down by 1.3%. as a group the bloomberg commodity index rising by the most since february but the rest bite did not last. the world's biggest provider of temporary work is posting a 22%
rise in second quarter profit. that is a slight miss. they are a bellwether for the economy. gamma holdings down by 4%. one of the biggest decliners across europe. it is the swiss asset manager that says it will cost 165 jobs after reporting a drop in first-quarter profit. we know the chief executive of this company and we have spoken to him many times. alexander friedman. took over last year as serving as the global chief investment officer at ubs. he is trying to seek ways to shore up earnings which have been hurt. he has been reducing the value of assets and other currencies.
cap is trying to strengthen its markets in the united states. a three-day decline but that is the big story. jon: let's set up into russia economicse russia's slide picks up pace. the gdp contracted 4.6% from one year earlier. ryan chilcote has been covering this story for us from moscow. where is the russian economy headed and is this is bad as it can get? it may not be as bad as it can get. these the risk him in worse than expected on top of a contraction of over 2% in the first quarter. the thing here is the underlying reasons. it is that investment is down and industrial production is down and specifically consumer demand is down by much more than people thought it might be. part of the reason for that is the ruble's devaluation.
basically the importers of this country have been passing on the rising costs to consumers. going forward, the economy russiay has been telling that the worst is behind them that the second quarter would be the lowest point but capital economics said that may not be the case. they expect a contraction of more than 6% and they say the local point may not come until the third quarter and part of that is the oil price that continues to decline but that might be short-lived. then of course the ruble has been declining as well and that could push inflation up again which would further hurt consumer demand. jon: at ryan chilcote over in moscow. for now -- for more we are joined by the vice president of -- >> the first question in my mind
is how do we break this down? is this just begin to russia's inability to diversify away from oil? >> the general estimate would be that one third is caused by sanctions and two thirds by the drop in oil prices. it really depends what the oil prices are at the moment but that is what sounds like. but russia clearly missed an opportunity to reconstruct and restructure. reliant on remains the export of oil and gas to the markets. the model industrial towns inside of russia itself so the structural problems in the russian economy are really just being exposed by the drop in oil prices. jon: in the immediate terms i in an990 night -- 1998 echo chamber with the volume turned up.
i say dollar-ruble surging and oil getting hit they do not to the crisis in the way many might have expected. when do we start to see that really bite? russian economy is that more than 50% is owned by the state. they've been really busy trying to support the large enterprises. this is actually mitigating effect. there have been some issues for certain companies but there wasn't a real pickup. the general expectation was to see it at the end of this year. jon: on the military side to cannot get away from it. dying down or -- is that? hovering above the whole situation. where are we? >> there has been considerable escalation of military activity in recent weeks.
the violence in eastern ukraine has been rising for quite some time. worstjust seen the shelling since a february cease-fire yesterday and there is a huge question. they are now being approached by the separatist from the north and the east. jon: final question. last spring i would sit here and it was very much a headline driven equity market. and the new normal and the status quote is just how things are. my question would be how far away are we from getting to a solution? >> there are still sanctions. they would only be triggered by an outright russian invasion of the ukrainian territory and that is unlikely to happen. in between we are in the regime that we have now which we call level three light sanctions.
unlikelyme is highly to change in the next six months. because of the highlight and continuing violence in eastern ukraine. .he situation where having now jon: another six months with the status quote. thank you for joining us this morning. on bloomberg tv, everything in a to watch for the rest of the trading day. inflation data from italy and germany. we will wrap up the last 24 hours of the big china news and what is coming up after the break.
jon: welcome back to bloomberg tv. i'm jonathan ferro. we have had a busy 12 hours. we will get a reading of italian inflation and a few minutes time but also the financial market survey at the same time. that is all coming up at the top of the next hour. let's check out the market 54 minutes into the session. theftse 100 is still in red. where the midas off the session lows. that's what has been pinning down the footsie. we were down as much as 2% for some of these stocks. the big story overnight is china threshing the daily reference rate by a record amount
triggering the biggest one-day loss for the u.n. and two decades. power storyrchasing clearly playing out in the markets. the pulse is coming up at the top of the hour to about three or four minutes time and i'm very pleased to say that francine lacqua will be anchoring that show with manus cranny. manus cranny is next to me sorting out his microphone. manus: if i had many are another two seconds you would've seen the entire floor crew operating. chinese personified it amazingly which is to have your cake and eat it. have they joined the currency wars? that is what we will drill into in the pulse. street manage over $2
billion trade simon derrick will join us from bank of new york. he will reflect back on is it ? ally such a big move jon: given the appreciation pro but -- probably not. manus: you can bring in these big thinkers in terms of, is it a one off? is it a big move? will there be more. it opens up some and more questions. i find the irony beautiful that they would not dare think are with the you one as that might adjust how the imf perceives them and then you have a host of people sweeping through this morning -- but enough of currency. to nollywood. being theubbed as
francine: the people's bank of its dailyhes reference rate triggering its biggest one-day loss in two decades. manus: google transforms itself into a conglomerate called up about, as the tech giant searches for a new feature. a rescue greece -- package that could be worth 76 billion euros. a rescue package that could live into "the pulse," london. i'm francine lacqua. manus: